The financing of Dutch offshore wind energy projects looks positive.
That is the main message of the ‘Financing offshore wind’ study, which PwC carried out on behalf of Invest-NL. “All stakeholders must ensure that a broader transition takes shape,” say Abo Rassa, senior business development manager at Invest-NL, and Robert Hensgens, energy economist at PwC. “If you only build at sea and you are not able to sell the electricity on to the market, every business case erodes.”
The study ‘Financing offshore wind’ is partly the result of the question that the sector table ‘Electricity’ asked Invest-NL – in the context of the Climate Agreement – about the long-term financability of offshore wind. Previous research by the Ministry of Economic Affairs and Climate concluded that the business cases for offshore wind farms will come under pressure in the long term if developers cannot dispose of the generated energy.
In addition, Invest-NL initiated this study to investigate the long-term financing perspective. Abo Rassa: “To this end, we called in the help of PwC and AMSCAP and interviewed fifteen parties in the value chain – think of developers, financiers and banks – about their willingness to finance wind energy at sea.”
“If you purely look at the willingness to finance offshore wind farms, that’s quite a success story,” says Robert Hensgens. “The offshore wind industry and its financing market have matured over the past fifteen years. Many different investors and financiers are prepared to step into these developments at different times. Offshore wind energy is seen as an attractive and relevant investment. However, there is a downside. There are concerns as to whether there is still enough appetite in the market to continue developing wind farms if the developers run the full electricity price risk. Investors – and banks in particular – only really want to step in when there are hardly any risks left. If you could enter into many more power purchase agreements (PPAs) for the long term, you could reduce the risks and this would have a positive impact on financing. With these agreements, the electricity has actually already been sold and you know how much you get paid for it.”
Read the full report here.